Interactive Systems Worldwide Inc., a New Jersey I-gaming software developer, has revised its licensing and support agreement with Mexico's Hipodromo de Agua Caliente, raising fresh questions about the company's long-term financial stability.
In the original agreement, inked in August 2006, ISWI agreed to supply Caliente's betting shops with in-running betting services. Under the revised agreement, however, ISWI's in-running services will no longer run in Caliente's shops but online.
The new Caliente-branded site is expected to launch in time for the 2008 N.F.L. season, which begins Sept. 4. Caliente, a gambling operator, maintains 160 shops across Latin America.
For its part, ISWI is to receive an upfront payment, as well as monthly license fees based on revenue that Caliente generates -- further financial details were not disclosed.
The agreement, the original terms of which were set out in 2006, will run through to the end of the 2008 calendar year, but no mention was made of a potential renewal.
With ISWI on a knife's edge, it is unclear what impact the Caliente contract renegotiation -- and the potential loss of a licensee -- will have on the company's tenuous financial health.
"This is a sensitive time for the company, and I'm concerned about saying anything that hasn't been released in a more general publication," Bernard Albanese, the chief executive of ISWI, told IGamingNews by telephone Tuesday.
As of the company's second-quarter results, which covered the three months to March 31, it was not cash-flow positive.
In April, when the third quarter was just getting underway, ISWI raised $50,000 via a private placing to ensure its ability to operate beyond that month.
Later in the third quarter, the company announced liquidity issues were dire enough that Mr. Albanese had agreed to defer payment of his salary, as a liability to ISWI, at a voluntarily reduced rate of $180,000 per year.
In the same announcement, however, the company revealed it had generated $4 million in turnover during the month of June -- a record -- presumably from the UEFA European Football Championship.
Of that $4 million, $150,000 was retained after winning wagers were paid: this for a hold percentage of 7.58.
A recent licensing agreement with Sunderlands, the United Kingdom bookmaker, as well as a potential long-term deal with the Ontario Lottery and Gaming Corporation may be enough to keep ISWI's head above water in the near term.
But with liquid resources of $124,000 on a second-quarter net loss of $320,000, the company's third-quarter results should be a telling indicator of where its precarious financial future lay.
Chris Krafcik is the editor of IGamingNews. He lives in St. Louis, Mo.